At a family dinner yesterday my brother mentioned that he had heard a radio program with a well known financial individual who advised a caller that starting to save $100 per month in a ROTH IRA as a young person in her twenties starting out would be a really good idea because she could ultimately end up with over a million dollars at retirement age. I was asked if this was indeed a good idea and should he pass along this advice to a younger family member as well.
I’m all for starting to save funds as early as possible and it’s a great habit that will help develop flexibility and priority setting for a lifetime. However, dubious math calculations and investment choices aside in this case, I am very uncomfortable with professionals offering sound bites of advice that promise great results without having the time to ask other relevant questions and see if other tools are being used appropriately first. Americans seem to have become enamored with quick answers and relying on others to gauge the validity of someone’s advice. The particular financial individual has been on Oprah (who I do admire!) and so folks figure that’s good enough for them. But there’s no way anyone can instantaneously review and assess someone’s best interests in a 60 second blurb, and by taking a quick response as gospel you may well be sailing over other options and considerations that would really be important to you.
There are many good tools for investing and implementing other areas of your financial plan. But please, for your own true benefit, take some time to become educated on your finances, get a second or third qualified opinion, and make sure you really understand why you are making a particular decision that will affect both your money and your life outcomes. Sound bites may be fun and easy….but ultimately you get what you pay for.